THE political sleaze row involving the lobbyist, Mr Ian Greer, extended to Labour last night when a leading peer was forced to resign from Mr Tony Blair's parliamentary team.
Baroness Turner of Camden, a director of Mr Greer's lobbying company, quit her post as a senior front bench spokeswoman in the Lords after defending him in a television interview.
It was the first time Labour had been drawn significantly into the row following the decision of the Tory MP, Mr Neil Hamilton, and Mr Greer to drop their libel action against the Guardian.
Last night Mr Blair said of Baroness Turner's decision: "She did the right thing in standing down and doing it straight away."
Earlier the Prime Minister, Mr John Major, pledged to "co operate fully" with the investigation into the cash for questions allegations against the former trade minister, Mr Hamilton.
The Prime Minister wrote to the Parliamentary Commissioner for Standards, Sir Gordon Downey, assuring him that he would make available to his inquire any relevant government documents. He said Sir Gordon would be free to inspect all the papers which the government provided to the Court in relation to Mr Hamilton's abandoned libel action against the Guardian.
Baroness Turner said she was resigning as shadow employment spokeswoman in the Lords because "it would be inappropriate" to remain on the front bench after the Channel 4 News interview.
In the interview, Lady Turner, who has been a member of the hoard of Ian Greer Associates for the past five years, insisted the lobbyist had done nothing wrong. She defended Mr Greer's payment of £10,000 to Mr Hamilton for "business introductions" the MP had made.
"It is quite a standard commercial practice to pay commission to people who introduce business to you," she said.
"We believe we have acted completely in accordance with the law and completely in accordance with the ethics of our professional association. We didn't pay MPs to ask questions in the House.
Labour's leader in the Lords, Lord Richard, stressed: "There is no suggestion that she has acted improperly in her capacity as a director of his company."
The Shadow Chancellor, Mr Gordon Brown, said Baroness Turner resigned because she was a friend of Mr Greer and did not want that to be linked with the Labour party.
"That's a completely different matter because there are no allegations of impropriety against Baroness Tunner," he told BBC TV's Question Time.
The shadow Chancellor said the Prime Minister should condemn Mr Hamilton's behaviour and "he should say to him that he shouldn't be a Conservative candidate at the next election and a Conservative MP. He, should go and he should go now.
The government papers are reported to relate to discussions between Mr Hamilton and senior ministers - including the then President of the Board of Trade Mr Michael Heseltine - when the allegations were first made two years ago.
Earlier this week Mr Hamilton admitted he had received £10,000 from Mr Greer, despite having originally assured Mr Heseltine there was no financial relationship between them.